Shared services in local government

This audit finds that most shared services initiatives by local government are soundly based, have appropriate governance arrangements and effective project management. Summary Victorian councils are required by the Local Government Act 1989 to endeavour to achieve the best outcomes for their local community, which includes ensuring that resources are used effectively and efficiently. Shared services can potentially assist councils to reduce expenditure and operate more efficiently. Shared services involve councils working together and/or with other organisations to share costs and resources, including delivering external services, such as libraries and waste collection, or providing back office functions, such as human resources and payroll, or the procurement of goods and services. Most councils undertake shared services, with existing initiatives primarily relating to procurement and external service delivery. The main areas of expected growth are procurement and back office functions, which provide a significant opportunity to realise cost savings and other benefits. Initiatives are generally soundly based, have appropriate governance arrangements and effective project management. However, there is significant scope for improvement in measuring the achievement of expected benefits. Local Government Victoria provides a range of support to councils in relation to shared services. It could build on this by investigating how the expected growth in back office shared services might impact on its future policies and programs, and assisting councils to improve their monitoring, evaluation and reporting of benefits